Warnerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March.
|Date||Activities||Units Acquired at Cost||Units Sold at Retails|
|Mar. 1||Beginning inventory||100 units @ $50.00 per unit|
|Mar. 5||Purchase||400 units @ $55.00 per unit|
|Mar. 9||Sales||420 units @ $85.00 per unit|
|Mar. 18||Purchase||120 units @ $60.00 per unit|
|Mar. 25||Purchase||200 units @ $62.00 per unit|
|Mar. 29||Sales 160 units @ $95.00 per unit|
|Totals||820 units||580 units|
Compute gross profit earned by the company for each of the four costing methods. For specific identification, the March 9 sale consisted of 80 units from beginning inventory and 340 units from the March 5 purchase; the March 29 sale consisted of 40 units from the March 18 purchase and 120 units from the March 25 purchase.
|Gross Margin||FIFO||LIFO||Avg. Cost||Spec. ID|
|Less: Cost of goods sold|
Perpetual Inventory System:
Perpetual inventory system monitors the balance of inventory through recording inventory related transactions to the inventory accounts. At the same time, a cost of goods sold is also also maintained everytime a sale is being made. Although physical count is not yet being done, the cost of goods sold can already be monitored.
Answer and Explanation: 1
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fromChapter 1 / Lesson 15
Perpetual inventory systems are used by businesses to monitor their inventories in real-time with the use of radio frequency identification, barcodes, point of sales, and other technological systems. Learn about the definition of a perpetual inventory system, the advantages of using this system, and some examples of perpetual inventory systems.